Key Employment Law Changes for 2025: What You Need to Know

Attention employers and HR professionals! We hope you had a well-deserved break over the festive season and are ready to dive into the new year, empowered to tackle whatever comes your way. As we begin 2025, it's crucial to be aware of some significant changes in employment law that could impact your workplace and practices.

Compliance is just one part of the equation. A culture of fairness and respect not only helps meet legal obligations but also motivates employees to give their best and stay with the organisation.

Key Employment Law Changes for 2025: What You Need to Know

1. Changes to Introductory Classifications (Effective 1 January 2025)

   One of the first major changes to be aware of is related to introductory classifications under various awards. As of January 1, 2025, these classifications can only apply for a limited time, and new rules regarding minimum pay rates for introductory employees are now in effect. Make sure you’re aware of these updates to avoid paying below the required wage.

2. The Right to Disconnect for Small Business Employers (Effective 26 August 2025)

   Starting in August 2025, small business employers will be required to adhere to the “right to disconnect” regulation. This rule will ensure employees are not expected to be available for work outside of standard working hours, helping promote a healthy work-life balance. Be prepared to integrate this policy into your business practices if you're in the small business sector.

3. New Protection for Employee-like Workers (Effective 26 February 2025)

   Starting in February 2025, employee-like workers (such as those working on digital labor platforms or road transport contractors) will have greater protections if they face unfair termination or deactivation. In December, the FW Commission (FWC) published its Codes which will form an important part in assessing any claims of unfair deactivation / unlawful termination by workers. These workers will have the right to approach the FWC for assistance in resolving these matters, and potentially have their contract reinstated or be compensated. It’s important to understand these new protections, especially if your business relies on contract-based or gig economy workers.

4. Wage theft attracts criminal liability under the Fair Work Act 2009 (Cth) (FW Act) (Effective 1 January 2025)

   From 1 January 2025, failing to pay an employee what they are owed, whether intentionally or not, can now result in criminal or civil liability. In the 2023-2024 financial year, more than 160,000 workers were underpaid in Australia, with the majority of recoveries coming from large corporate employers. This is a clear warning for all businesses, large and small, to take payroll compliance seriously. If an employer intentionally withholds pay or fails to meet the obligations set by modern awards or enterprise agreements, they can face criminal prosecution. On the other hand, if the non-payment is unintentional, the employer may still face civil penalties, such as fines.
   
   

How to Avoid Wage Theft: A Guide to Compliance

The Code indicates that the likelihood of prosecution will be lower if, before the employer became aware of the underpayment, it made reasonable efforts to determine the correct rates of pay and entitlements for affected employees by:

• Reviewing the applicable award or enterprise agreement, and relevant provisions of the Fair Work Act (FW Act), while considering:

  • The nature of the business;

  • The employee’s role and responsibilities;

  • The appropriate classification for the employee’s position;

  • Minimum pay rates, allowances, penalties, overtime, and any other identifiable payments; and

  • Any other relevant pay requirements, such as annualised salaries or piece rates.

• Relying only on information regarding each employee’s role, duties, classification, qualifications, age, working hours, and location that the employer has reasonably assessed and believes to be accurate;

• Seeking guidance from reliable sources, such as state chambers of commerce, trade or professional associations, industrial lawyers, the Fair Work Commission, or the Fair Work Ombudsman (FWO); and

• Making reasonable efforts to remain informed about obligations concerning employee pay and entitlements, including updates on:

  • Changes to the FW Act and the applicable award or enterprise agreement; and

  • Changes to the employee’s circumstances, such as their role, duties, classification, qualifications, age, hours, or location of work.
    
    

Steps After Identifying Underpayment

The risk of prosecution will be reduced once the employer is aware of the underpayment, provided it took reasonable steps to correct the underpayment by promptly repaying the affected employees and proactively addressing measures to avoid similar issues in the future. This could include seeking advice from reliable sources and rectifying any errors or weaknesses in the employer’s systems.

The risk of criminal prosecution for wage theft will also be lowered if:

• The underpayment resulted from an error or mistake in payroll processing or by a financial institution;

• The underpayment occurred due to ambiguity or conflicting interpretations of obligations related to employee pay, with the employer relying on a reasonable but incorrect interpretation;

• The employer became aware of the underpayment after conducting an audit of their payroll compliance; or

• The size of the underpayment was minimised due to the employer’s swift action in addressing the issue once discovered.
  
  

Final Thoughts

As we enter 2025, staying ahead of employment law changes is more critical than ever. Whether it's complying with new wage rates for introductory employees, implementing the right to disconnect policy, or ensuring you're not caught in the wage theft trap, being proactive in your understanding and application of these laws will protect your business and employees.

If you're uncertain about any of these changes or need assistance with compliance, don't hesitate to seek guidance, as your proactive approach will help you avoid pitfalls and build a fair and compliant workplace for the year ahead.